Obama's America: Children Liable for the Government Debts of Their Parents

Hit and Run's J.D. Tuccille calls the practice "feudal" -- requiring the children of parents who owe money to the federal government to pay the bill years later. If so, don't be surprised if the Obama administration brings back the rack. Or perhaps they won't go all Medieval on us and just reinstall the stocks as corporal punishment.

One of the truly unique and exceptional things about America in the late 18th century was that the sins of the father could not be visited on the son. That tradition stood -- until now. And as Tuccille explains, it was a two step policy change that brought this stinkburger about:

The new multi-generational debt collection practice required a two-step policy change. One was the elimination of the 10-year statute of limitations on debts to the federal government. The other involves the Social Security Administration insisting that if tiny tots indirectly benefited from public assistance collected by adults decades ago those now-grown ex-tots are responsible for any overpayments the feds may claim.

The elimination of the statute of limitations may, on its face, allow the government to go after individuals responsible for incurring debt, but the longer time horizon means accurate records can be hard to come by. According to Fisher, "Social Security officials told Grice they had no records explaining the debt."

How do you collect a debt that you can't prove exists? Through the sheer grinding weight of the state, of course.

Going after the next generation—which never made the decision to incur a debt to begin with—really is a massive break from previous policy.

Most financial websites advise heirs that they are responsible for parents' debt only if they cosigned loans, held joint accounts, or shared community property with the deceased. Beyond that, the debt adheres to the debtor's estate and may devour any inheritance. The estate belonged to the debtor and passes to heirs only after bills are paid. But the debt stops there.

What's interesting about this policy is that other federal agencies aren't following it; only the Social Security Administration and Treasury Department seem to be engaged in this generational theft. Others, like the FTC, aren't enforcing the change.

In a Washington Post article, one victim of this astonishing policy tells her story:

A few weeks ago, with no notice, the U.S. government intercepted Mary Grice’s tax refunds from both the IRS and the state of Maryland. Grice had no idea that Uncle Sam had seized her money until some days later, when she got a letter saying that her refund had gone to satisfy an old debt to the government — a very old debt.

When Grice was 4, back in 1960, her father died, leaving her mother with five children to raise. Until the kids turned 18, Sadie Grice got survivor benefits from Social Security to help feed and clothe them.

Now, Social Security claims it overpaid someone in the Grice family — it’s not sure who — in 1977. After 37 years of silence, four years after Sadie Grice died, the government is coming after her daughter. Why the feds chose to take Mary’s money, rather than her surviving siblings’, is a mystery.

Across the nation, hundreds of thousands of taxpayers who are expecting refunds this month are instead getting letters like the one Grice got, informing them that because of a debt they never knew about — often a debt incurred by their parents — the government has confiscated their check.

I couldn't find anything on this issue published before today. And yet, it's apparently been a rule for 3 years. Why hasn't this issue been challenged in court?

Grice found a lawyer willing to take her case without charge. Vogel is exercised about the constitutional violations he sees in the retroactive lifting of the 10-year limit on debt collection. “Can the government really bring back to life a case that was long dead?” the lawyer asked. “Can it really be right to seize a child’s money to satisfy a parent’s debt?”

But many other taxpayers whose refunds have been taken say they’ve been unable to contest the confiscations because of the cost, because Social Security cannot provide records detailing the original overpayment, and because the citizens, following advice from the IRS to keep financial documents for just three years, had long since trashed their own records.

In Glenarm, Ill., Brenda and Mike Samonds have spent the past year trying to figure out how to get back the $189.10 tax refund the government seized, claiming that Mike’s mother, who died 33 years ago, had been overpaid on survivor’s benefits after Mike’s father died in 1969.

“It was never Mike’s money, it was his mother’s,” Brenda Samonds said. “The government took the money first and then they sent us the letter. We could never get one sentence from them explaining why the money was taken.” The government mailed its notice about the debt to the house Mike’s mother lived in 40 years ago.

Are you getting the feeling that we're living in Venezuela or some other banana republic rather than America? No due process. No explanation. Just intimidation and the realization that you would probably spend your life savings to fight for a couple of hundred or thousand dollars.